1/3/07 KUALA LUMPUR,  (Bernama) -- Oil palm companies are urged to catch the next big tide in the industry which is in downstream operations.

"The increase in demand for palm oil as an alternative fuel and growing awareness of dangers associated with the consumption of trans-fats have fuelled the oil palm downstream race," Prof Boey Peng Lim from Universiti Sains Malaysia's School of Chemical Sciences said in a statement here today.

Boey said downstream industry could be Malaysia's next big tide.

"Malaysia needs to look beyond its current horizon as the oil palm plantation sector in Malaysia is getting crowded and Indonesia is already surging ahead," he said.

He said just like many commodity industries such as rubber, coffee and cocoa, the highest value was not in its plantation operations, but in its ancillary products for example gloves, tyres from rubber and chocolates and drinks from cocoa.

He said realising this, several nations had forged alliances to tap this vast opportunity.

"China National Offshore Oil Corp (CNOOC) has agreed to invest in a US$5.5 billion (US$1=RM3.47) biofuel plant project with Indonesia's Sinar Mas Group and Hong Kong Energy (Holdings) Ltd to develop biodiesel from crude palm oil and bioethanol from sugar cane in Papua New Guinea and Kalimantan.

"Another bio-diesel partnership formed was between CNOOC and a Malaysian firm, Bio Sweet Sdn Bhd. The joint venture will build a bio-diesel plant in southern China's Hainan Island with a capacity of 120,000 tonnes," he said.

Boey said although big palm oil firms had economies of scale and could manage price risks, the lack of downstream assets vital to tap the emerging biodiesel industry would hamper their growth.

-- BERNAMA